Problem Diagnosis
The Board of Directors’ of Zappos.com, the largest online retail store for shoes and other accessories received an offer from Amazon to merge both the companies. Zappos.com hold a strong position in the soft-line retail categories which is why Amazon, a multinational online retailer worth $19 billion has been chasing Zapopos.com for a potential merger since 2005 in order to strengthen its position in this category as well and to expand its market share.The idea and the interest are clear and the offer is very much apparent to Zappos.com. However, the senior executives of the company are interested and seem to like the deal but are concerned with the timing, which, according to them is not right to pursue a merger.
The CEO of the company, Hsieh and the COO of the company, Lin are aware of the deal and need to recommend the decision to the board in the next meeting. However, they both are aware that the strong culture and strong emphasis on customer service has played a vital role in the overall success of the company. Currently the company is focusing on the three C’s that are inherent in their business model include, clothing, customer service, and company culture and has been the most influential and strong contributors towards the overall growth of the company.
Amazon’s offer seems legit to some extent and has a strong attractiveness which may arouse the board, but the financial advisors have something different to say. Although Amazon is offering cash, stock shares, stock units for the employees of Zappos and most importantly the name as Zappos will serve as the subsidiary for Amazon but the decision is still critical. Therefore the CEO and the COO both have to consider a lot before proposing the final decision to the board.
Analysis
This section will highlight the situation analysis leveraging different models marketing and strategic models. The SWOT model will be utilized to conduct the internal and external analysis of the company while the VRIO model will help in identifying the source of competitive advantage for the company. On the other hand, the industry analysis conducted using the Five Forces that shape strategy will help in identifying the major threats and disadvantages that the company can face in the long run form the industrial perspective. Overall, this section will help in determining the possible alternatives for the company and will facilitate the CEO and the COO to present an accurate decision to the board.
SWOT
Strengths
Zappos.com has grown rapidly since its inception in 1999 and since then has been retained the title of being the largest online retailer of shoes and other soft-line accessories. This rapid growth is one of the major strengths of the company which is also translated into the financial value and exhibits a strong financial position of the company. Secondly, another major advantage for the company is the strong emphasis on customer service and the company culture.
The strength of the company also lies in its culture and values as the company has established a strong corporate culture which is also being appreciated by its employees. Furthermore, the delivery is quick and rapid as the majority of the clients or customers receive their product within 2 days. All these factors have played an essential role in developing a strong customer centric culture and provide impressive customer service.
On the other hand, the company has offered uniqueness leveraging innovation in every aspect that has created a strong market fort the company to cater. The overall business model of the company which includes the three C’s has been a major strength of the company and has played a vital role in making the company a success story.
Weaknesses
Although the company has been quite impressive since its inception and possess some interesting attributes, but there are some major weaknesses that are present in the internal structure of the company. Since its inception the company has only relied on online retailing and neglected the bricks and mortar aspect or opening physical outlets which have restricted the company in its approach of targeting the market. Due to its limitation, this strategy can be regarded or stated as a major weakness for the company..................
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